Planning for retirement starts today, not tomorrow

Saturday October 24 2020
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Christopher Segawa Nantagya

By Guest Writer

I recently watched an advert in which a famous African musician receives a call from his mother (bless her); no sooner has she gotten the salutations out of the way than she goes on to remind him that he forgot to send her some money.

It got me thinking. While it’s an extremely gratifying gesture to give back to one’s parents, how can we work towards a more sustainable support model - just as they educated us to have a fair chance at achieving financial independence?

At the peak of the Covid-19 pandemic state-wide lockdowns, social media platforms, radio and TV shows in Uganda went abuzz with the NSSF 20 percent relief pay-out - albeit wrongly intertwine or rather mixed up by most with the provisions proposed in the NSSF amendment bill 2019. Without a doubt it was tough times for most of us and telling one to hold on till retirement while they struggle to put a decent meal on the table was a tough ask – a drowning man will clutch at a straw. All reasoning and the concept of delayed gratification is kicked out the window; making it through today is far more important than financial independence in retirement.

Private investment experts always categorize a person’s capital into financial capital and human capital, which ideally combines to form one’s full capital potential. The former peaks at retirement, when one has a decent number of pay-checks banked and retirement savings built up, while the latter tends to peak when one joins employment. Keeping this equation in balance and assessing its status annually is something many omit. But monitoring this equation from your first pay-check all the way down to your retirement party seems to be the difference between a comfortable retirement and one filled with worries about tomorrow’s meal.

The intricacies of this equation are most definitely beyond the scope of today’s article, but there are investment professionals that can ably churn out these figures for you. As we join employment, we have a rough idea of what we want to achieve in the next ten, twenty and thirty years; but we often postpone plans for these goals till we are days or months away from these milestones. You don’t have to wait to get that dream salary or that life changing bonus to plan for how much saving you want to draw from your bank account on your 65th birthday. It’s a goal you can set up today and change tomorrow to reflect your changing circumstances!

More often than not we save for the sake of getting a sense of safety, but if these savings are not channelled towards a given life goal it is just as easy to redirect those savings to unplanned competing needs (usually luxurious in nature). Because the savings are not tagged to a goal, they tend not to have a minimum return requirement but rather a mere return.


The risk embodied in such savings/investments also tends not to consider the risk profile of the saver. At its worst, this model results in savers being swindled into joining Ponzi and get-rich-quick schemes in order to give them a sense of capital deployment towards astronomical returns that are way beyond one’s goals. Such errors in judgement start with the lack of a simple goal based saving/investment plan.

The best way to plan for retirement is to form a goal based investment plan with goals such as education, house payment, holiday payment and car purchase. Set the amount of money you need by the time the need comes due and work backwards to find out how much you need to invest, how often and at what minimum rate of return. Remember saving or investing without a plan is akin to playing a football game without goal posts – how shall you determine the score or winner?

Christopher Segawa Nantagya

Twitter: @cnsegawa